ZIMBABWE SCHOOL EXAMINATIONS COUNCIL

ZGCE ADVANCED LEVEL SYLLABUS

ECONOMICS 9158

EXAMINATION SYLLABUS FOR 2013 - 2016

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ECONOMICS ZGCE ADVANCED LEVEL Contents Page Introduction 3 Aims 3 Assessment Objectives 4 Scheme of Assessment 5 Curriculum Content 7 Appendix A: Comparison of Curriculum content with

A Level Syllabus 9074 Appendix B: Resource List Appendix C: Checklist of Economic Terms and Concepts NOTE Additional copies of this syllabus and the specimen paper booklet can be ordered from ZIMSEC.

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1 INTRODUCTION 1.1 The aim of this syllabus is to enable Centres to develop an Economics course

that is suitable for Advanced Level candidates. 1.2 Three methods of assessment are used (multiple choice, data response

questions and essays). 1.3 Candidates must offer papers 1, 2 and 3. 1.4 No previous study of the subject is assumed by the syllabus. 2 AIMS 2.1 The syllabus is intended to encourage a course that will:

(a) provide a basis of factual knowledge of economics,

(b) encourage the development in the student of:

(i) a facility for self-expression, not only in essay form but also using additional aids such as statistics and diagrams where appropriate,

(ii) the habit of using works of reference as sources of data specific to

economics,

(iii) the habit of reading critically to gain information about the changing economy in which we live,

(iv) an appreciation of the methods of study used by the economist

and of the most effective ways in which economic data may be analysed, correlated, discussed and presented.

3 ASSESSMENT OBJECTIVES

These indicate the skills that the examination will be designed to test in conjunction with the subject matter listed in the syllabus.

3.1 Candidates are expected to:

1 DEMONSTRATE KNOWLEDGE AND UNDERSTANDING of the specified content,

2 INTERPRET economic information presented in verbal, numerical or

graphical form,

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3 EXPLAIN AND ANALYSE economic issues and arguments, using relevant economic concepts, theories and information,

4 EVALUATE economic information, arguments, proposals and policies,

taking into consideration relevant information and theory, and distinguishing facts from hypothetical statements and value judgements,

5 ORGANISE, PRESENT AND COMMUNICATE economic ideas and

informed judgements in a clear, logical and appropriate form. 3.2 The Multiple Choice component (Paper 1) will seek to test particularly

Assessment Objectives 1, 2 and 3.

The Data response component (Paper 2) will seek to test particularly Assessment Objectives 2 and 3, and to a lesser extent Assessment Objectives 1, 4 and 5.

The Essay component (Paper 3) will seek to test particularly Assessment Objectives 1, 3, 4 and 5 and to a lesser extent Assessment Objective 2.

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Scheme of Assessment Three compulsory papers will be set as follows: Paper Duration Mark

Weighting 1 Multiple Choice 1½ hours 40 items, all to be attempted 30% 2 Data Response 1¼ hours 2 questions, both to be answered 20% 3 Essays 3 hours 4 questions to be answered from a 50%

choice of about 12 Papers 1 and 2 will be timetabled in the same session with a short break between the papers. Candidates must offer Papers 1, 2 and 3. Paper 1 Multiple Choice All the multiple choice items will be of the simple type with four responses suggested for each item. Multiple choice questions will be set on the whole syllabus. Of the forty questions, no more than ten (25%) will test knowledge alone and no less 30 (75%) for skills 2 and 3 (interpretation, explanation and analysis). Paper 2 Data Response This paper aims to test particular skills rather than specific areas of knowledge, and for this reason each paper will contain two compulsory questions carrying 20 marks each. No question will demand knowledge of a particular economy, and data will be included from various economies. The data may be presented in graphical or tabular or textual format. Within each question there will be a number of sub-questions, and it is the examiners' intention that earlier sub-questions will test skills of definition, description, identification and observation. Later sub-questions will test the skills of application, analysis and evaluation by inviting candidates to use their knowledge of economic principles to solve specific problems that can be observed in the data before them. Although all the sub-questions will be related to the data presented in each question, each of the sub-questions will present separate aspects so that success in any particular sub-question will not be dependent on success in earlier sub-questions.

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The two questions in a paper will therefore aim to test the candidate's ability to answer: (a) basically straightforward questions in which the data required are fairly obvious, (b) questions that require some simple re-arrangement or summarising of the data, (c) more complex questions that require candidates to search the data to select

relevant material for their answer, (d) a final sub-question that will require candidates to evaluate and analyse aspects

of the data in relation to their understanding of some of the central concepts of economics.

Paper 3 Essays Candidates will be required to answer any four questions. SPECIFICATION GRID SKILL

PAPER 1

PAPER 2

PAPER 3

1 Knowledge and

understanding

20-25%

20%

28%

2 Interpretation

50-55%

40%

16%

3 Analysis

20-25%

30%

20%

4 Evaluation

---

5 Organisation, Presentation

and Communication

---

10%

36%

NB Each question in Paper 3 will test up to the highest skill. 4 CURRICULUM CONTENT 1 Basic Economic Ideas

(a) Scarcity, choice and resource allocation

(i) Meaning of scarcity and the inevitability of choices at all levels (individual, firms, governments)

(ii) Opportunity cost (iii) Basic questions of what will be produced, how and for whom

(b) Different allocative mechanisms

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(i) Market economies (ii) Planned economies (iii) Mixed economies

(c) Production possibility curve - shape and shifts

(d) The margin: decision making at the margin

(e) Positive and normative statements

(f) Ceteris paribus

(g) Factors of production: land, labour, capital, enterprise

(h) Division of labour

(i) Efficient resource allocation: concept of economic efficiency; productive

and allocative efficiency. 2 Theory of Demand

(a) Individual demand curves

(b) Aggregation of individual demand curves to give market demand

(c) Factors influencing demand

(d) Movements along and shifts of a demand curve

(e) Price, income and cross-elasticities of demand

(i) Meaning and calculation (ii) Factors affecting (iii) Implications for revenue and other business decisions

(f) Utility Theories

(i) Marginal Utility Theory:

- Law of diminishing marginal utility and its relationship to

derivation of an individual demand schedule and curve. - Equi-marginal principle - Limitations of marginal utility theory.

(ii) Indifference Curves Theory

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- Budget lines: Income and substitution effects of a price change.

(g) Consumer surplus 3 Theory of Supply

(a) Individual firm's supply curves

(b) Aggregation of individual firm's supply curves to give market supply.

(c) Factors influencing market supply, including indirect taxes and subsidies. Movements along and shifts of a supply curve.

(d) Price elasticity of supply, determinants, implications for speed/ease with

which businesses react to changed market conditions.

(e) Short-run production function; fixed and variable factors of production, total product, average product and marginal product. Law of diminishing returns (Law of variable proportions).

(f) Long-run production function: returns to scale.

(g) Economist's versus accountant's definition of costs

Marginal cost and average cost. Short-run cost function - fixed costs versus variable costs Explanation of shape of SRAC.

(h) Long-run cost function.

Explanation of shape of LRAC: economies and diseconomies of scale Internal and external economies and diseconomies of scale.

(i) Survival of small firms

Growth of firms

(j) Relationship between elasticity, marginal, average and total revenue for a downward-sloping demand curve.

4 Theory of the Firm

(a) Price and output determination:

- Interaction of demand and supply: equilibrium price and quantity; price as a rationing and allocative mechanism,

- meaning of equilibrium and disequilibrium,

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- effect of changes in supply and demand on equilibrium price and quantity,

- applications of demand and supply analysis.

(b) Concepts of the firm and industry.

(c) Traditional objective of the firm - profit maximisation. Normal and abnormal profit. An awareness of other objectives of the firm.

(d) Different market structures - perfect competition, monopoly, monopolistic

competition, oligopoly. Structure of markets as explained by number of buyers and sellers, nature of product, degree of freedom of entry and nature of information. Contestable markets.

(e) Conduct of firms - pricing policy and non-price policy, including price

discrimination, price leadership models and mutual interdependence in the case of oligopolies.

(f) Performance of firms - in terms of output, profits and efficiency.

Comparisons with regard to economic efficiency, barriers to entry, price competition, non-price competition and collusion.

5 Theory of Distribution

(a) Factors of production: Labour, Land, Capital and Enterprise.

(b) Rewards to factors of production: wages, rent, interest and profits; share in the national income.

(c) Wages

(i) Demand for Labour as a derived demand

- meaning and factors affecting demand

- derivation of an individual firm's demand for a factor using

marginal revenue product theory.

(ii) Supply of Labour

- meaning and factors affecting supply - net advantages and the long run supply of labour.

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(iii) Wage determination under free market forces (competitive product

and factor markets)

- The role of trade unions and government in wage determination; collective bargaining.

- wage differentials, economic rent and quasi-rent.

(d) Rent: Supply factors peculiar to land in general and for particular uses.

(e) Interest: Difficulties in the concept of capital. Structure of interest rates. Loanable funds theory of interest rates and its limitations. Liquidity preference theory of interest rates and its limitations. Interest rate determination in practice, including role of government and of international influences.

(f) Profit: Accountant's and economist's concepts of profit.

Normal profit as transfer earnings. Abnormal profit. Role of profit.

6 Government Intervention in the Price System

(a) Sources of market failure

(i) Externalities (ii) Meaning of deadweight losses (iii) Market imperfections - existence of monopolistic elements. (iv) Public goods and merit goods

(b) Cost Benefit Analysis

(i) Social costs as the sum of private and external costs. (ii) Social benefits as the sum of private benefits and external

benefits.

(c) Conditions for allocative efficiency.

(d) Objectives of government microeconomic policy: efficiency, equity.

(e) (i) Policies to correct market failure: regulation: maximum price controls, price stabilisation, taxes, subsidies, direct provision of goods and services, production quotas, butter stock.

(ii) Policies towards income and wealth redistribution. (iii) Effectiveness of government policies.

(f) Decision making using cost benefit analysis

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(g) Commercialisation and Privatisation

Problems of transition when central planning in an economy is reduced.

7 International Trade

(a) Principles of absolute and comparative advantage, and their real-world limitations. Other explanations/determinants of trade flows e.g. political Opportunity cost concept applied to trade.

(b) Arguments for free trade and motives for protection

(c) Types of protection and their effects

(d) Economic integration: free trade area, customs union, economic union:

advantages and disadvantages. Its real world significance to developing and developed countries.

(e) The role and impact of commodity agreements.

(f) Terms of trade: calculation, meaning, trends. Relationship to Balance of

Payments.

(g) Balance of Payments (BOP)

Components of Balance of Payments

Its nature and meaning in terms of current and capital transactions. The Balance of Payments - composition of the trading and non-trading accounts. Significance of net property income from abroad and capital transactions in developed and developing economies.

Balance of Payments problems

(i) Meaning of BOP equilibrium and disequilibrium (ii) Causes of BOP disequilibrium (iii) Consequences of BOP disequilibrium on domestic and external

economy. (h) Fluctuations in foreign Exchange Rates

(i) Definitions and measurements of exchange rates - nominal, real,

trade-weighted exchange rates. (ii) Determination of exchange rates-floating, fixed, managed float. (iii) Factors underlying fluctuations in exchange rates.

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(iv) effects of changing exchange rates on the economy.

(i) Policies designed to (i) correct BOP disequilibrium (ii) influence the exchange rate.

8 Theory and Measurement in the Macroeconomy

(a) The circular flow of income between households, firms, government and the international economy.

(b) National Income Statistics

(i) Measurement of national income (ii) Use of National income statistics as measures of economic growth

and living standards. (iii) Money and real data; Gross Domestic Product (GDP) deflator. (iv) Comparison of economic growth rates and living standards over

time and between countries: purchasing power parity theory. (v) Other indicators of living standards and economic development.

(c) National Income Determination

(i) Main schools of thought on how the macroeconomy functions.

Keynesian and Monetarist views. (ii) Aggregate Expenditure function (AE)

Meaning, components of AE and their determinants. Income determination using AE - income approach and withdrawal/injection approach. Inflationary and deflationary gaps; full employment level of income versus equilibrium level of income. The multiplier Autonomous and induced investment; the accelerator.

(iii) Shape and determinants of AD Shape and determinants of AS Interaction of AD and AS: determination of level of output, prices and employment.

9 Money and the Price Level

(a) Money: its functions and characteristics (b) Money supply

- Broad and narrow money supply - Government accounts; government budget, deficit financing - Sources of money supply in an open economy (commercial

banks/credit creation, central bank, deficit financing, total currency

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flow).

(c) The demand for money

- Interest rate determination - Liquidity preference theory and loanable funds theory.

(d) General Price Level: price indices

Inflation: (i) definition of inflation and degrees of inflation

(ii) causes of inflation (iii) consequences of inflation (iv) policies to cure inflation.

10 Macroeconomic Problems and Policies

(a) Economic Growth and Development

(i) Definition of economic growth and development (ii) Indicators of comparative development and underdevelopment in

the world economy - economic, monetary, non-monetary and demographic indicators.

(iii) Characteristics of developing economies: population growth and structure, income distribution, economic structure, employment composition, external trade and urbanisation in developing economies, the nature of dependency, including the role of multi-national corporations.

(iv) Actual versus potential growth in national output. (v) Factors contributing to economic growth (vi) Costs and benefits of growth (vii) Policies for development: analysis of factors in the development

process; policies of trade, aid and industrialisation; development through borrowing and its implications in terms of external debt, the debt crises. The role of international financial institutions e.g. IMF and World Bank.

(b) Unemployment

(i) Definition of unemployment, full employment and natural rate of

unemployment

(ii) Difficulties involved in measuring unemployment; employment statistics; patterns and trends in unemployment/employment.

(iii) Size and components of labour force; labour productivity (iv) Causes and types of unemployment (v) Solutions to unemployment

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(c) Inflation (see Money and price level)

(d) BOP (see International trade) (e) Exchange rate fluctuations (see International trade)

(f) Inter-connectedness of problems:

Links between macroeconomic problems and their interrelatedness, for example

- relationship between internal and external value of money - relationship between balance of payments and inflation - relationship between inflation and unemployment; trade-off

between inflation and unemployment.

(g) Objectives of macroeconomic policy

Stabilisation: price stability, equity, full employment, BOP equilibrium, growth and development.

(h) Types of policy: Aims and instruments of each policy; how each is used

to control inflation, stimulate employment, stimulate growth, correct balance of payment disequilibrium; the effectiveness of each

(i) Fiscal policy (ii) Monetary policy (iii) Exchange rate policy (iv) Supply side policies (v) Incomes policy (vi) Trade Policy (vii) Price Policy

(i) Conflicts between policy objectives and evaluating policy options to deal

with problems.

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APPENDIX A COMPARISON OF CURRICULUM CONTENT WITH A LEVEL SYLLABUS 9058 Compared with the A Level Economics syllabus 9058, The following topics are deleted or downgraded so that they will not be the subject of specific questions: t free goods t Giffen goods t factor rewards linked to costs t nationalisation t objectives of public sector firms t official definitions of money t description of credit creation process and the following topics are added or upgraded so that they could be the subject of specific questions: t contestable markets t interaction of aggregate demand and aggregate supply t exchange rate policy and supply side policies as macroeconomic policies.

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APPENDIX B RESOURCE LIST This is NOT a list of prescribed texts, but merely an attempt to provide a range of alternatives from which teachers may like to choose. Author

Title

Publisher

ISBN

Date

Anderton, AG

Economics

Causeway

1873929374

1995

Beardshaw, J

Economics: A Student's Guide

Longman

0582303486

1998

Begg, David et al

Economics

McGraw Hill

0077094123

1997

Davies, Brinley et al

Investigating Economics

Macmillan

0333638085

1996

Dunnett, A

Understanding the Market

Longman

0582325064

1998

Grant, Susan

Workbook for Stanlake, Introductory Economics

Addison Wesley Longman

0582302560

1997

Hardwick, Philip et al

Introduction to Modern Economics

Addison Wesley Longman

0582357152

1999

Heather, Ken

Understanding Economics

Prentice Hall

0136501699

1997

Ison, Stephen

Economics

F T Management

0273634275

1999

Lipsey, Richard and Chrystal, K Alec

Introduction to Positive Economics

OUP

0198774257

1995

Livesey, Frank

Textbook of Core Economics

Longman

0582238676

1995

Sloman, John

Essentials of Economics

Prentice Hall

013779844X

1997

Stanlake, GF and Grant S

Introductory Economics

Longman

0582246148

1995

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Dictionaries Bannock, Graham et al. (eds)

Penguin Dictionary of Economics

Penguin

014053760

1998

Pearce, David (ed.)

Macmillan Dictionary of Modern Economics

Macmillan

0333576934

1992

Wall, Nancy et al.

The Complete A - Z Economics and Business Studies Handbook

Hodder

0340669853

1996

Internet: Teachers will also find useful material on website http://www.bized.ac.uk/

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APPENDIX C CHECKLIST OF ECONOMIC TERMS AND CONCEPTS NB A checklist such as this is neither exhaustive nor prescriptive: unless it is

indicated as `not required', the omission of an item from this list does not mean that examiners will not refer to it, while teachers may find if helpful or desirable in their courses to introduce terms and concepts even if they lie outside the scope of the examined syllabus.

TOPIC TOPIC

abnormal profit average propensity

absolute advantage average revenue

accelerator average variable cost

active balances balance for official financing

ad valorem tax balance of payments

aggregate demand balance of trade

aggregate expenditure balanced Budget

aggregate supply balancing item

allocative efficiency Bank Rate

appreciation (exchange rate) barriers to entry

at constant prices barriers to exit

at current prices barter

at factor cost base date

at market prices bilateral trade

automatic stabilisers birth rate

autonomous broad money supply

average cost budget line

average fixed cost

average product

canons of taxation cross-elasticity of demand

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capital current account of Balance of Payments

capital account of Balance of Payments customs unions

capital gain cyclical unemployment

capital market deadweight losses

capital: output ratio death rate

cartels deficit

cash ratio deficit financing

cash ratio deposits deflation

central bank deflationary gap

ceteris paribus demand

change in demand demand conditions

change in quantity demanded demand cuve

cheques demand-deficiency unemployment

circular flow of income demand-pull inflation

closed economy demand schedule

closed shop demerit good

coincidence of wants dependency ratio

collective bargaining depreciation (of capital)

command economy depreciation (exchange rate)

commercial banks derived demand

commodity agreements devaluation

comparative advantage development

comparative costs diminishing marginal utility

complementary goods diminishing returns

concentration, industrial direct taxation

consumer surplus discount houses

consumption diseconomies of scale

contestable markets dissaving

cost of living distribution of income

cost benefit analysis division of labour

cost of production dumping

craft union economic efficiency

credit creation economic growth

credit multiplier economic union

economic rent

economies of large dimensions free trade

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economies of scale free trade areas

effective demand frictional unemployment

efficiency full employment

elastic funding

elasticity of demand general government final consumption

elasticity of supply general unemployment

enterprise general union

entrepreneur government expenditure

equi-marginal utility gross domestic product

equilibrium gross domestic product deflator

equilibrium price gross national product

equilibrium quantity horizontal integration

equity (fairness) household expenditure

exchange control hyperinflation

Exchange Rate Mechanism IBRD (the World Bank)

excise duties idle balances

exports IMF

external balance immobolity of labour

external benefit impact of a tax

external economies imperfect competition

externalities imperfections

factor cost adjustment import penetration

factor of production imports

financial economies of scale incidence of a tax

fiscal boost, inflationary income effect

fiscal drag, inflationary income elasticity of demand

fiscal policy income tax

fixed capital incomes policy

fixed capital formation increasing returns

fixed costs indices

fixed exchange rates indifference curves

floating exchange rates indirect tax

foreign exchange induced investment

industrial union marginal physical product

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inelastic marginal propensity

infant industries argument marginal revenue

inferior goods marginal revenue product

inflation marginal tax rates

inflationary gap marginal utility

infrastructure market

injections market economy

integration market failure

interest market system

interest rate marketing economies

intermediation, financial Marshaall-Lerner Condition

internal economies of scale maximisation

investment measure of value

invisible balance medium of exchange

J-curve menu costs of inflation

Keynesian merit goods

labour microeconomics

laissez-faire migration

land Minimum Lending Rate

law (economic) mixed economy

law of demand mobility of labour

law of supply Monetarism

leakages monetary policy

liquidity money

liquidity preference money supply

liquidity ratio monopolistic competition

liquidity trap monopoly

loanable funds theory monopsony

Lome Convention multilateral trade

long run multinationals

Maastricht, Treaty of multiplier

Macroeconomic narrow money supply

managed floating National Debt

marginal cost notational income

natural increase

natural rate of unemployment perfectly inelastic

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natural monopoly Phillips Curve

near-money planned economy

negative externalities point elasticity

net advantage positive externalities

net domestic product positive statement

net national product poverty trap

net property income from abroad precautionary demand for money

nominal price agreements

non-excludability price competition

non-pecuniary advantages price discrimination

non-price competition price elasticity of demand

non-rivalness price leadership

normal goods price mechanism

normal profit primary sector

normative statement principle of multiples in economies of scale

occupational mobility private benefits

official financing private costs

oligopoly private goods

open economy private sector liquidity

open market operations privatisation

opportunity cost producers' surplus

optimum output production possibility curve

optimum population productive efficiency

optimum resource allocation productivity

other things being equal profit

paradox of thrift profit maximisation

paradox of value progressive taxation

Pareto optimality proportional taxation

patents protectionism

paternalism PSBR

pecuniary advantages PSDR

pensions public goods

perfect competition purchasing power parity

perfectly elastic quality of life

Quantity Theory of Money specific tax

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quasi-rent speculative demand for money

quotas standard of deferred payments

rate of interest standard of living

rationing store of wealth

real structural unemployment

rectangular hyperbola subsidy

reflation substitute goods

regional policies substitution effect

regressive taxation supernormal profit

rent supply

reserve currencies supply conditions

resources supply curve

Restrictive Practices Court supply-side economies

retail banks surplus

Retail Prices Index sustainability

revaluation tariffs

risk-bearing economies of scale taxation

sales maximisation technical economies

sales revenue maximisation technical unemployment

satisficing profits terms of trade

saving tertiary sector

scarcity total currency flow

seasonal unemployment total revenue

second best theory trade creation

secondary sector trade cycle

services trade diversion

shares trade unions

shoe leather cost of inflation trading possibility curve

short run transactions demand for money

Smith, Adam transfer earnings

social benefits transfer payments

social costs Treasury Bills

special deposits unemployment

Special Drawing Rights unit of account

specialisation unitary elasticity

unstable equilibrium

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urbanisation

utility

value added

variable costs

variable proportions

velocity of circulation

vertical integration

visible balance

voluntary unemployment

wage differentials

wage drift

wages

weights

withdrawals

working capital

yield